Pachinko U: Majoring in tumbling steel balls

TOKYO (TR) – A stroll around Shinjuku Station will reveal plenty of pachinko parlors emitting a rapid-fire clinging of steel balls and pounding dance tunes.

Such clamor is music to the ears of Ei Yoshida, president of G&E Business School, which teaches all there is to know about what is basically an upright pinball game.

“Our students either want to change their career,” says Yoshida from his third-floor office on Shinjuku-dori, “or they are already working in pachinko and need to learn more.”

Established in 2006, G&E Business School annually instructs 200 students, aged between 19 and 25, to work in this massive industry, one that recently has been facing a downturn yet remains highly dynamic.

Classes include such subjects as programming of the machines, selecting background animation, marketing, and management. Live machines in rows nearly bring a real parlor to the classroom.

“When the students are finished here,” Yoshida says, “they go on to work at companies that produce the machines or in pachinko advertising.” The G&E brochure shows photos of graduates who have moved on to such heavyweight machine manufacturers as Sankyo and Sammy.

The president, who two decades ago worked as a low-level employee at a parlor, sees pachinko as a business that is very unique to Japan’s landscape. “As long as the site is 50 meters away from a school or hospital,” he says, “a parlor can be established anywhere.”

To play is easy. Players turn the machine’s dial to launch dozens of balls upward. The silver spheres then tumble downward through mazes of nails and into certain slots or gates that can yield many more balls. The machines are set at one of six cycles, each of which generates a different rate of payout.

Patrons cannot convert the balls to currency inside the parlor. (Only electronics, toiletries, and other small items are available for exchange.) Obtaining cash is done via a middleman at a satellite office away from the parlor. This extra step, by law, makes this form of gambling — a word Yoshida does not prefer — technically legal.

Pachinko’s origins probably date back to a horizontal board game imported by an Osaka company from the United States in 1924. In 1948, the first parlor opened in Nagoya following enactment of the Entertainment Establishments Control Law, under which the game is classified as an amusement.

The industry employs 300,000 people at its 13,500 parlors and, as of 2006, generates 25 trillion yen in turnover. This figure eclipses that brought in by lotteries, boat racing, horse racing, and other types of gambling combined. Maruhan, Japan’s largest hall operator that also dabbles in bowling and food services, collected revenues of 1.8 trillion yen for the term ending March 31, 2008. Last year, Forbes included two pachinko company presidents, Kunio Busujima of Sankyo and Han Chang-Woo of Maruhan, in an article titled “Japan’s 40 Richest.”

While the industry is a sizeable force, overall revenue is down from its peak of 30 trillion yen in 1995. Yoshida, however, does not foresee a problem. “Before, without making much effort,” he says, “a parlor could make money. But now, a person not making any effort is losing business. It’s the basics of capitalism. There is a lot of competition.”

Along these lines, the industry is attempting to rid itself of the seedy, gang-ridden reputation it has acquired over the years and woo women into its halls by providing a clean and pleasant environment. Brand-name goods are increasingly being offered as prizes, and the romantic Korean drama “Fuyu no Sonata,” a large hit with Japanese women, has had its characters appear as background images on numerous machines by maker Kyoraku in recent months.

Yoshida hopes to soon expand his school to include branches in the cities of Nagoya and Osaka. “When I started in pachinko,” he says, “people thought I was entering the world of gangsters. But this is now a legitimate business.”

Note: This article originally appeared in the October issue of Japan Inc. magazine.